More Advantages of trading binary options

Binary options have become one of the most popular ways to speculate on market price movements across a vast number of underlying assets. The growth in its popularity, from a fairly specialised trading derivative to one of the most popular investment tools used by both new and experienced traders is down to the potential for high profits to be gained from very short-term trading. Binary options therefore not only offer access to hundreds of different underlying assets but also the ability to make an average of between 75-80% return on an initial investment in as little as 60 seconds. The simplicity that binary options offer traders is also a major factor why many are leaving conventional forex and spread betting brokers to trade ‘all-or-nothing’ binary options. In their most basic form, binary options require that a trader simply speculates on whether the options will expire higher or lower than the current price, thus offering a very attractive number of profitable trading opportunities.

High returns even in slow markets

One of the most obvious advantages of trading binary options over any other form of trading is that they require very little market volatility to produce highly profitable outcomes. Trading currencies or equities, by comparison, require that markets rise or fall by a certain number or points in order for the trade to be sufficiently profitable. The profit and loss of these trades are determined by how far away from the purchase price the market moves and a certain degree of volatility is preferred. Binary options, however, only need price to move a single point higher or lower than the purchase price in order to be deemed successful or unsuccessful. This means that, even in the slowest of markets, profitable trades can still be made with returns of up to 80% of the initial investment.

Removing the necessity for stop losses

Similar to not needing market volatility in order to result in binary options expiring profitably, they also do not require the distraction of a market stop-loss or take-profit level. Basic binary options only have two, pre-determined, risk and return rates for each investment, these can neither be increased nor decreased during the lifetime of the binary options. The amount which can be lost is therefore s fixed as is the profit that can be gained. The advantages of this are that traders no longer need to focus on where to place (or extend) their stop losses and take profit levels. There is also no way that emotional decisions to extend risk during a trade can be taken which makes binary options particularly attractive to new traders.

No spreads with binary options trading

Unlike conventional forms of trading, including forex and spread betting, binary options trading does not include spreads. The entry and exit price will be exactly that quoted by the trading platform, and traders will not be required to pay the brokers the spread either side of this. For many traders, this is considered an excellent advantage and reason alone to trade binary options rather than other forms of trading. Removing spreads also allows traders to speculate on price movements during overnight and volatile periods which are traditionally times when spreads are wide and make trading riskier and difficult to profit from. Furthermore, it also removes the default negative position that all trades open with due to the fact that the trade must take account for the slightly worse entry price that spreads create.

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